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Strategies & Market Trends : Technical Analysis - Beginners
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To: jebj who wrote (8825)10/23/1998 8:16:00 AM
From: Tom Halkar  Read Replies (1) of 12039
 
Jb

Great list of books to read for anyone learning TA.
Message 3217586

Wade Cook's book is good, however this is not the market to applied it to right now. Want to see some stability in the small caps stock, because that where he applies covered calls. His book does not teach anything of value on TA and you want to master TA and your emotions first.

Then you can applied cover calls in a up trending market. He is big on the idea of cover calls, which is you hold the stock and writing a covered calls giving someone else the ability to take away your stock at the excised price. In return you get the premium of the options and any profit between what you brought it for.

ex You buy 500 shares of xyz company @ 14 1/2 and you write a covered calls for the Nov. 15 call, which selling for 1.
The premium is 500 x 1= 500 you get to keep this money regardless of your happens. If the option is excised you will have made an additional 50 cents per share( 15 - 14 1/2 or another 250), so your you received 750 minus commissions. However if the stock goes down in price you get to keep the premium and the stock. The possible cost for that premium is you are locked into holding the stock until the options expires, which could be OK in you are in a normal correction phase of the stock, which if that happens you can write another covered call once the other expires on the 3rd Friday on that month.

Tom
The Windy city
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